The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1887-09-07
Gtle Qttteuiigttuer
". VA, SEPTEMBER !. 1887

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WHEELING. W. VA, SEPTEMBER :, 1887,
Tho Financial Policy OF tho u. Il o.
Whatever may DO tho ultimate truth
about the baltimore & Ohio deal" this
much Ia absolutely suro, that through its
inability TO tsko care Of It's large floating
deb. the road has como into such financial
straits as to compel 1t to an extraordinary
and humiliating step in order to relieve
itself. It Is as true now as In the days OF
Solomon that "the borrower Is servant to
the lender" and also true that the Balti.
more & Ohio has fallen from It's iormer
high estate as borrower to that OF party
who is compelled to eat good slice Of
humble pic along with his financial &C.
commoda.ions.
Tao wonder Is rs 10 how this change has
occurred. Thers has been no panic in
the country and there Is no war Of rates
going on such ss followed the memorable
panic Of 1873. True, the Baltimore 4
Ohio has been somewhat Of an 1shmaellte
Of late IN rotnsing to cooperate with the
other trunk lines, but that has baen to
some extent accounted for by It's desire to
compel the Pennsylvania road to allow 1t
an entrance into Now York. l...
The fact lie, however, tina. the financial
policy OF MIR. Robert CARROTS preaeces-
sor Is at bottom reeponsible for what has
at last taken place. We have frequently
referred to his general policy az narrow
and short sighted. 1t vas no lees 80 in
the matter Of financial management than
in his management in general, II indeed
such distinction can possibly be made.
His grand mistake was, OF course, in his
utter failure ct an early day to compse-
hond the development Of this country IN
railroad way, and hence he let slip great
opportunities to acquire cheaply connec.
tons and terminals that late. on he es-
ssyed to acquire at vast expense and at
many disadvantages. To his chapter OF
mistakes we have frequently referred and
1t need not now DO ,ehearsed.
Mr.. CARROTS idea was to keep down
his capital stock, and when he had to Dor
row money to raise 1t on mortgages. This
wonld have been sound policy il his rail-
road had been destined to be forever what
ito name implies, simply o line from Bal
timo.s 10 the Ohio river. Bat in coun-
try like thia no such ststuu was polsible.
The road had either to 90 forward OF 50
backward. No half way policy, such ss
Mr.. Garrett 80 long sought to pursue, was
possible. His idea was not TO either
build or buy lines, but to be creditor TO
them and take security IS u money lender
to them, and thus be controller in G.
cheap wsy. To do this his plan was to
borrow money on the credit o! his own
line and ,re-lenl to his allied connections.
This was q feeble policy, sound as 1t
looked at ons time, There was limit OF
course to bis borrowing capacity but
there was no limit to the development Of
the country and its railroad system. He
could not hope to raise money enough to
meet tho nocessty Of acquiring control
OF weaker lines in the face Of other trunk
line competition for the came control.
But so strong WAS tho banker precliyity
in Mr.. Garrett to keep down his stock
and assure dividends on it, that he
would not follow the policy so
early inaugrratsd by his rival, the Penn.
Hylvsnia road. Tho policy Of that road
was just the reyerae Of his, viz, to issue
new stock in payment Of valuable scqui-
sitions and keep down ito bonded debt.
By this policy it kept its interest account
down to as low limit as possible. In
other words, it enhanced the value OF its
line by not endsngeriug it's ultimate sol.
yency. Ii there we're no not earnings the
utockholders got nothing, and nothing had
to be sacrificed in order to provide inter
eat. And as to diyidsnda, the record will
show that on the whole the Pennsylvania
has paid dividends almost aa regularly,
and about IS much in tho aggregate as The |
Baltimore & Ohio. S. "a.
7 Now look at the re6ults Of the two
policies to-day: The Baltimore & Ohio
has something lees than s2O,00O,0O0 Of
stock and about sol.000,00O. OF bonded
debt. But It has only 1,7ss miles Of road
under iss ownership or control, and only
terminals Of preca1ious aud inferior
character, and no terminal whatever in |
the great emporium OF tho country. On
tho other hand ita great rival, tho Penn
sylvania road,while having share capital
of s9s000.000, and bonded debt Of
$Sl,OoO00O, has $3.50 miles OF owned and
controlled line, including the creamy parts
Of the country, and terminate Of tho most
ample and enyiablo character, especially
in Now York. Consequently, while the
Baltimore 4 Ohio for the year 1856 shows
groas earnings OF only SIS, 49,, 437, the
Pennsylvania shows fer tho samo year
slol,607,9sl, or moro than five times as
much. .5. e
Much also has been made in the reports
Of the Baltimore L Ohio shout Its large
alleged surplus fund, but what sovsrsr
comment need DO made on that fiction in
It's fnanccu than to say it has virtually
gone to protest on q floating debt Of
100000 while claiming in It's report OF
September s0sh last a surplus Of over SlS,-
100000. It's surplus has always been lit.
tie more than misleading trick Of book
keeping, such for instance rs lie practice